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Does fiscal cooperation increase local tax rates in urban areas

Author

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  • Charlot, S.
  • Paty, S.
  • Piguet, V.

Abstract

The main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country, using the French experience in urban municipalities. We estimate a model of tax setting for local business tax using spatial and dynamic econometric techniques, for the period 1993-2003 and an unbalanced data set. As predicted by the theory, we find that reducing the number of municipalities is likely to limit tax competition and, as a consequence, increase local business tax rates.

Suggested Citation

  • Charlot, S. & Paty, S. & Piguet, V., 2012. "Does fiscal cooperation increase local tax rates in urban areas," Working Papers 201202, Grenoble Applied Economics Laboratory (GAEL).
  • Handle: RePEc:gbl:wpaper:201202
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    Cited by:

    1. Edoardo Di Porto & Vincent Merlin & Sonia Paty, 2013. "Cooperation among local governments to deliver public services : a "structural" bivariate response model with fixed effects and endogenous covariate," Working Papers halshs-00787600, HAL.
    2. Clémence Tricaud, 2019. "Better alone? Evidence on the costs of intermunicipal cooperation," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2019-12-ccr, Condorcet Center for political Economy.
    3. Clémence Tricaud, 2019. "Better alone? Evidence on the costs of intermunicipal cooperation," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2019-12-ccr, Condorcet Center for political Economy.

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    More about this item

    Keywords

    FISCAL COOPERATION; TAX COMPETITION; VERTICAL EXTERNALITIES; LOCAL BUSINESS TAX;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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